July 1 (Bloomberg) -- U.S. stocks rose, rebounding from the
first monthly loss since October, and metals led commodities
higher as reports bolstered optimism in manufacturing from Japan
to the U.S. The yen weakened while Treasuries erased early
losses to trade little changed.

The Standard & Poor’s 500 Index climbed 0.5 percent to
1,614.96 at 4 p.m. in New York, paring an earlier rally of 1.3
percent. The Stoxx Europe 600 Index and Japan’s Topix Index rose
more than 1 percent each. The yen slipped 0.5 percent to 99.60
per dollar. The yield on the 10-year Treasury note decreased two
basis points to 2.47 percent after rising as much as 6 basis
points earlier. Copper, gold and aluminum jumped more than 2
percent to lead commodity gains.

The Institute for Supply Management’s factory index climbed
to a three-month high of 50.9, beating the median economist
forecast, while the Bank of Japan’s Tankan report signaled
manufacturers’ confidence increased for the first time since
2011 and another report showed euro-area manufacturing output
shrank less than initially estimated.

There is “a sense of optimism toward the second half,”
Michael Weiner, chief investment officer at Unified Trust Co.,
in Lexington, Kentucky, said in a phone interview. The wealth-management firm oversees more than $3 billion in assets. “The
market is beginning to think about second-quarter earnings and I
think it wants to turn its attention away from the Fed-oriented
things.”

$2.6 Trillion

More than $2.6 trillion was erased from the value of global
equities last month as speculation mounted that the Federal
Reserve will curb stimulus measures this year. U.S. government
securities handed investors a loss of 2.5 percent in the first
six months of 2013, according to Bank of America Merrill Lynch
data, the biggest decline since the first half of 2009.

The S&P 500 rebounded after losing 1.5 percent in June, its
first monthly decline since October. The S&P 500 still rallied
13 percent in the first half of the year, the best performance
since a 17 percent gain in the first six months of 1998.

Trading volume in S&P 500 companies was 16 percent below
the 30-day average. The benchmark index for U.S. stocks pared
earlier gains after briefly climbing above its average for the
past 50 days, a technical level watched by traders.

Industrial, consumer-staple and commodity shares led gains
among the 10 main industry groups in the S&P 500 today, while
utility and telephone companies posted the only declines.

Market Movers

Onyx Pharmaceuticals Inc. surged 51 percent after saying it
is in contact with other possible bidders following its
rejection of an unsolicited offer from Amgen Inc. Apple Inc.
added 3.2 percent after Raymond James & Associates Inc. lifted
the stock to strong buy from outperform. Pandora Media Inc.
rallied 3 percent as Morgan Stanley upgraded the stock.

U.S. payrolls data due this week will be key for investors
seeking to gauge the timing of any Fed tapering, according to
AMP Capital’s Graham. Payrolls probably grew by 165,000 workers
in June, after gaining 175,000 in May, according to the median
forecast of 70 economists surveyed by Bloomberg before the
data’s release July 5.

BMO Capital Markets raised its 2013 estimate for the S&P
500 to 1,650 from 1,575. Strategists led by Brian Belski said in
a note to clients they had overestimated the market’s reaction
to the potential reduction in Fed stimulus while “earnings
growth projections are slowly improving, and macro data has been
relatively upbeat lately.”

Alcoa Inc. will mark the unofficial start to the second-quarter earnings season on July 8 as the first Dow Jones
Industrial Average company to report results. Per-share profit
is forecast to have increased 2.4 percent during the period,
according to a Bloomberg survey of analysts on June 28, led by a
20 percent increase at financial firms. Earnings excluding
financial companies are projected to have decreased 0.9 percent
in the period.

Stock Skew

While American equity volatility had its biggest increase
in two years last quarter, bearish options remain cheap when
compared with bullish ones.

The Chicago Board Options Exchange Volatility Index climbed
33 percent from April to June, the most since the third quarter
of 2011, when it surged 160 percent. At the same time, options
protecting against a 10 percent slide in the S&P 500 this year
cost an average 8.28 points more than calls betting on a 10
percent rally, the least since 2006, according to three-month
data compiled by Bloomberg.

Emerging Markets

The MSCI Emerging Markets Index was little changed
following a four-day rally of 6.5 percent, the biggest since
December 2011. The Shanghai Composite Index advanced 0.8 percent
and money-market rates declined, with the seven-day repo rate
sliding 71 basis points to 5.45 percent and earlier touching
5.40 percent, the lowest since June 17.

China’s Purchasing Managers’ Index fell to 50.1 from 50.8
in May, according to statistics released in Beijing, as a cash
squeeze reduced credit and President Xi Jinping said officials
shouldn’t be judged solely on their record in boosting the
economy.

The yield on Egypt’s benchmark dollar bond due in April
2020 jumped to a record above 10 percent after protesters
demanded President Mohamed Mursi step down.

Commodities Gain

The S&P GSCI gauge of 24 commodities gained 0.8 percent as
copper jumped 3.4 percent and aluminum rallied 3.1 percent for
the biggest advances. Gold for August delivery increased 2.6
percent to $1,255.70 an ounce, the biggest gain since April, as
demand for coins, bars and jewelry rebounded following a record
quarterly plunge.

Wheat futures slid 0.4 percent to a one-year low of $6.55 a
bushel, extending the longest slump since 2005, on signs of
record global output and reduced demand for supplies from the
U.S., the world’s biggest exporter. Corn fell 1.9 percent to the
lowest price since 2010 after the U.S. raised its plantings
estimate to the highest since 1936.

Oil advanced 1.5 percent to $97.99 a barrel, rising for the
fifth time in six days.

Oil Spread

The difference between the world’s two most-traded crude
oil grades shrank to less than $5 a barrel for the first time in
about 2 1/2 years, underlining the easing of a supply bottleneck
in the U.S. North Sea Brent crude was $4.99 a barrel more than
West Texas Intermediate today, the first time the spread between
the two grades has been at $5 or less since January 2011 on an
intraday basis, according to data compiled by Bloomberg.

WTI, the main U.S. crude grade, had been typically the more
expensive grade until mid-2010. The drop in the gap between
Brent, a gauge for more than half the world’s oil, and WTI shows
how improved pipeline networks and the use of rail links have
helped to unlock a glut at America’s oil-storage hub at Cushing,
Oklahoma.

The yen depreciated against 15 of its 16 major
counterparts, sliding 0.9 percent versus the euro. The yen has
dropped 9 percent this year, the worst performance in a basket
of 10 developed-nation currencies tracked by Bloomberg
Correlation Weighted Indexes. The dollar climbed the most with a
6.2 percent advance and the euro rose 5 percent.

South Korea’s won jumped 0.7 percent against the dollar
after data showed the nation registered a $5.5 billion trade
surplus in June versus May’s $5.9 billion, the most since
October 2010. The surplus averaged $2.9 billion in the past
three years.

The JPMorgan Global FX Volatility Index lost 0.9 percent to
10.91 percent after touching 11.96 percent on June 24, the
highest since June 2012. The average for 2013 is 9.21 percent.